Share these talks and lectures with your colleagues
Invite colleaguesResearch paper
M-PESA at the point of sale: Expanding financial inclusion and reducing demand for physical cash
Journal of Payments Strategy & Systems,
7
(4),
359-369
(2014)
Abstract
This paper proposes the idea of the M-PESA service being used for purchases at the point of sale (POS). In some large supermarkets in Kenya, customers are able to use M-PESA for payments, but those transactions are recorded as transfers and, as such, transfer fees apply. Safaricom recently launched a platform for bill payments in restaurants through M-PESA, and the expansion of this service to smaller stores in rural areas would have quite an impact on the process of financial inclusion. The paper also offers a comparative perspective between cash withdrawal fees and transfer fees through M-PESA, arguing that adjustments need to be made to the pricing scheme if Safaricom is to employ POS payments. On the cost side, the idea of POS payments would reduce demand for physical cash and reduce operational costs for Safaricom. Additionally, the paper proposes the idea of combining merchants with M-PESA agents, in order to reduce fixed and training costs, which could further allow for downward adjustments in the price of new payment services at POS from Safaricom.
Keywords: M-PESA; POS; financial inclusion; cash; merchants
The full article is available to subscribers to the journal.
Author's Biography
Holti Banka is pursuing his PhD at the School of Public Policy, University of Maryland, focusing on International Development and Economic Policy. He has been involved with projects at the World Bank and the International Finance Corporation on payment systems. His primary academic research looks at ways of achieving financial inclusion and economic growth through the use of electronic payment instruments. Specifically, his research on payment systems has three main themes. The first is associated with the cost aspect of payments and, specifically, the quantification and measurement of societal costs that stem from the use of payment instruments. The second theme includes the empirical assessment of the effects that electronic payment adoption have on macroeconomic indicators such as consumption. The third theme explores the process of converting cash transfers into electronic transfers and the benefits attached to the process for governments and the transfer recipients. Holti Banka received his BA in Economics and Mathematics from Williams College, Massachusetts, and his MPP from the School of Public Policy, University of Maryland.
